A quarterly Wall Street Journal survey of housing data in 28 major metro areas shows that the glut of unsold homes listed for sale is shrinking in most of them. Locally, in El Dorado County, the listing inventory has continued to go down for the last six months. Metro areas with the biggest drops in for sale signs include Sacramento and Orange County. Southern California saw sales jump 65% from a year ago—More than one-third of those sales were from foreclosures. In Sacramento, we saw sales go up 82% from last September with 64% of those being bank owned properties. El Dorado County sales are about 30% to 50% bank owned real estate.

We have the election results, the U.S. government bailout program, the continued commitment of major lenders to modify thousands of existing mortgages, the law SB 1137 that went into affect on September 8th that slows down the foreclosure process. (Ask me for full details) And, of course, the stock market slide in October.

Ok, some good news and some bad so what happens next? That’s where the challenge of predicting the market comes in.

In a nutshell, market conditions in Santa Clara County (inventory, sales and DUI) continue to improve. Inventory is 146% of the 8-year average. That is down from 220% at the end of 2007. Offers initiated have increased from the 55% range to 114%. The volume of initiated sales has stayed above 100% since August 9th. There are a still larger than normal number of transactions that are failing to close. Consequently, closings are still only at 80% of normal in Santa Clara County. DUI has dropped 310% of normal at the end of January to only 114% of normal. A first level corrected DUI to compensate for the higher than normal failure rate would increase DUI to about 130% of normal.

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